In Spain, unlike many EU countries, there is a limitation on cash payments for companies and professionals.
According to Law 11/2021 of July 9, on measures for the prevention and fight against tax fraud:
“Transactions in which one of the parties involved acts as a business owner or professional may not be paid in cash when the amount is equal to or greater than €1,000 or its equivalent in foreign currency. However, this amount shall be €10,000 or its equivalent in foreign currency when the payer is an individual who can prove that they do not have their tax residence in Spain and is not acting as a business owner or professional.”
As is well known, the wording of regulations is not usually clear or precise, so we will explain what this article means.
When a transaction involves, even if only on one side, a company or a professional, it is important to be clear about how to make or receive payment. If the transaction exceeds the aforementioned €1,000, the payment may not be split into several smaller payments in order to avoid exceeding this limit. In other words, the restriction applies to the total amount of the transaction.
Failure to comply with this rule results in a penalty amounting to 25% of the sum paid in cash, and both parties are jointly liable for the infringement. However, the Tax Agency will not impose a penalty if one of the parties reports the transaction within three months of the breach.
In addition, it should be noted that banks are required to inform the Tax Agency of all deposits and payments exceeding €3,000 or any transaction involving €500 banknotes.
If you have any questions about this article, please do not hesitate to contact us.
Isabel Riquelme